India and EU link up their SMEs

New Delhi: Even as a free trade agreement with the European Union is hanging fire, a technology platform of the 27-member bloc has joined hands with Indian business associations to facilitate two-way trade between small and medium enterprises (SMEs).

Indian small and medium industries, including those in bio-tech, pharma and cosmetics, seeking collaboration with European firms or information on trade can now just link up with the Enterprise Europe Network-India (EEN-India) platform, Poul V. Jensen, director of European Business and Technology Centre (EBTC), told IANS.

The EBTC, along with the Confederation of Indian Industry (CII) and the Federation of Indian Export Organisations (FIEO), are partners of EEN-India.

The EEN-India platform will act as a facilitator, "a direct channel", connecting Indian SMEs, which account for about 45 percent of the country's manufacturing output, to the sector in Europe.

The EEN will help sort out Intellectual Property Rights (IPR) issues during collaborations between Indian and European firms, do the "handholding" to guide them through red tape and help in networking, Jensen said.

"It will open the doors of European Union to India and vice versa."

Why the focus on SMEs?

"In Europe, 99 percent of all GDP is with SMEs, but the importance always goes to MNCs as they do the big deals. The brunt of the economy is with the SMEs. In CII too, 60 percent of its members are SMEs," said Jensen.

According to Gurpal Singh, principal advisor and head of MSME at CII, the EEN platform would help to "combine core strengths of Indian and EU companies which will be mutually beneficial to both sides".

He said the EU has been "a very difficult market for the Indian MSMEs (Micro Small and Medium Enterprises), given its complexities, stringent rules and regulations and overall a very protected market".

"However now things will certainly look up for MSMEs, with India becoming an official member of the Enterprise Europe Network," Singh told IANS.

While the tech platform would help, business is looking forward to early conclusion of the free trade agreement with the EU. Singh said the FTA, officially dubbed as Bilateral Trade and Investment Agreement (BTIA), would help create lakhs of jobs besides boosting two-way trade.

"The FTA will also contribute significantly towards building strong ties between small businesses in the two regions," Singh added.

"Nevertheless the EEN will help facilitate the Indian MSMEs find international business partners, source new technologies and receive EU funding or finance. Also they can seek advice on issues so diverse as intellectual property, going international, or EU law and standards," he added.

India and the EU are negotiating the FTA since June 2007. The talks were to conclude in 2011 but differences over the level of opening of the market have delayed the pact. India has been seeking a single visa for its professionals on short-term contractual visits to the European Union. On the other hand, the EU has been asking for significant reduction in customs duty on cars, wines and spirits in their exports to India.

Two-way trade stood at USD 91.3 billion in 2010-11. A FICCI report says trade between the two sides is likely to more than double to exceed $207 billion by 2015, if the trade pact is formalised.

According to Jensen, Indian Ayurveda firms stand to gain by linking to the EEN platform.

Ayurveda products have to contend with a lot of regulation and stringent testing abroad. "The EEN network will help to be very clear in the process of marketing an Ayurveda product in Europe, including of the costs involved of the tests," he said.

"The test costs for ayurveda products can be prohibitive. A good European partner could work out sharing the costs and profits too of marketing," Jensen said.

There are 54 countries attached to the EEN, including Russia, Turkey and Israel. In Asia, the partners are China, Japan, South Korea and the latest is India.

To popularise the EEN-India website, newsletters, promotional events in smaller Indian cities like Agra and Kanpur, where many SMEs are located, are among the activities planned.

"I see a very good future, I see a flood of enquiries," from both sides said Jensen. And the target for the first year is 20 agreements, he added.